Home Depot down as HD Supply price cut; Campbell eyes Godiva sale; bankruptcy talk plagues Luminent

By Sheri Kasprzak

New York, Aug. 9 - Home Depot watched it stock fall off Thursday after the Atlanta-based home improvement retailer announcing plans to restructure its sale of HD Supply.

The move would, in part, cut the sales tag on the HD Supply operation from its previously announced $10.325 billion quote.

Meanwhile, shares of Campbell Soup Co. also took a slide after plans to sell off its Godiva Chocolatier business and move its focus back to its core product line - more wholesome processed foods like soups and crackers.

Even so, traders and analysts alike said the move would likely be a good one for the food maker once Campbell finds a buyer for the confectionary line.

And once again, the market couldn't escape continued strife in the mortgage-lending market.

Luminent Mortgage Capital, Inc. watched its stock fall off, yet again, this time after releasing its second-quarter earnings and following news Wednesday that it received default notices from two repo lenders.

Luminent, which has some serious liquidity issues, according to analysts, announced earlier this week that it would not be able to pay dividends because of its liquidity woes.

Bankruptcy talk still surrounds the San Francisco-based investment company.

But Luminent isn't the only mortgage company with liquidity troubles. Tarragon Corp. said Thursday it incurred some impairment charges of about $125 million and will be unable to file its quarterly report with the Securities and Exchange Commission.

This news comes as French bank BNP Paribas announced plans to suspend withdrawals from three of its asset-backed funds because of their exposure to subprime mortgage problems in the United States.

That news sent stocks into a downward spiral. At the end of the day, the Dow Jones Industrial Average fell by 387.18 to close at 13,270.68 and the Nasdaq composite index fell by 56.49 to end at 2,556.49. The Standard & Poor's 500 composite index settled down 44.40 to close at 1,453.09.

Home Depot restructures sale

Home Depot is in talks with affiliates of Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice over the restructuring, which will change the terms of its planned sale of HD Supply, a move that could cut the sales price from $10.325 billion.

The news sent the company's stock down 5.32%, or $2.01, to close at $35.79 (NYSE: HD).

The stock dropped more than 6.35% in pre-market action.

Connected to the restructuring, Home Depot reduced the price range on its planned Dutch auction tender offer to buy up to 250 million shares to a range of between $37 and $42, cut from a range of between $39 and $44.

The expiry on the tender off was also extended to Aug. 31.

As of Aug. 8, the number of shares tendered was 3,052,214.

How sweet is it?

Campbell's stock dipped on Thursday after the company announced plans to sell off its Godiva Chocolatier business.

The move isn't necessarily a bad thing, according to one sellside trader.

The trader said Thursday that even though the stock was off, the potential sale might actually be a smart move.

"It frees them up to focus more on other things within their core product line," he said. "The stock is falling today, largely, because they plan to sell off a popular brand. I don't think it's going to hurt CPB at all. Ultimately, once they do find a buyer, I think the stock is going to go through the roof."

An analyst agreed.

"The drop in stock, we feel, is temporary," said the analyst. "I think you'll find that once news of a buyer is announced, the stock will go up."

Campbell stock (NYSE: CPB) was down $1.70, or 4.60%, to $35.25.

Luminent's stock falls

Once again, Luminent's stock took a downward dip. Amid mortgage-lending woes, the company's stock fell by 10.53%, or 10 cents, to end the session at $0.85 (NYSE: LUM).

Volume skyrocketed with 3.809 million shares traded compared with an average 1,914,830 shares.

Analysts and traders alike have said this week have been awaiting a possible bankruptcy announcement from Luminent.

"It would not surprise me in the least," said one sellside trader on Thursday when asked if Luminent might file for bankruptcy. "I don't think that's the worst thing that could happen to them though. They could very well make a turnaround in bankruptcy."

An analyst said Thursday that he feels Luminent may file for bankruptcy.

"The signs are there," said the West Coast-based analyst. "They have a lot of liquidity problems but I would suggest that this isn't a Luminent problem - or at least it's not completely a Luminent problem. With the mortgage market the way it is, it's a fact of life for companies like Luminent."

Analyst Steven DeLaney with JMP Securities said Wednesday that he felt, following a trading halt of Luminent's stock, that the company would be announcing a bankruptcy announcement soon.

Earlier this week, the stock plummeted by more than 75% after the company announced that it would not be able to make its dividend payments.

And on Wednesday, Luminent received notices of default from two of its repo lenders.

"The company is continuing to vigorously explore all of its alternatives with respect to its sudden liquidity issues resulting from the unanticipated and extraordinary disruptions in the secondary mortgage and national real estate markets," said a statement from Luminent released Thursday.

"The company emphasized that in exploring its alternatives, it is fully focused on protecting its values for all constituencies."

Luminent said Thursday that its liquidity problems come from unexpected and extraordinary disruptions in the secondary mortgage and real estate markets.

Tarragon postpones quarterly report

Another company hit by mortgage-lending problems, Tarragon Corp. postponed filing its quarterly report with the SEC because it is evaluating impairment changes related to the company's plans to sell certain properties in the current market conditions.

Tarragon had until Thursday to file the quarterly report.

The news sent the company's stock diving by 66.67%, or $1.88, to close at $0.94 on Thursday, and lost another penny in after-hours trading (Nasdaq: TARR).

"Tarragon currently expects to record impairment charges in excess of $125 million," said a statement released Thursday by the company. "Tarragon is currently experiencing liquidity issues caused by the sudden and rapid deterioration in the real estate credit markets. This has resulted in Tarragon being unable to complete approximately $50 million in financing transactions that had been under negotiation and were expected to close in August 2007."

Among the negotiations being postponed because of its current liquidity problems is the spin-off of the company's homebuilding business as it works to address existing financial requirements.

New York-based Tarragon develops multifamily housing for rent and sale.

Compass Bancshares' stock slips

A day after sealing an agreement to buy Compass Bancshares, Inc., Banco Bilbao Vizcaya Argentaria, SA watched its stock slide slightly and Compass's stock also fell.

BBVA's stock slipped by 87 cents, or 3.55%, to end at $24.20 (NYSE: BBV) and Compass's stock ended down by $1.35, or 1.92%, to close at $69.08 (Nasdaq: CBSS), gaining 2 cents in after-hours trading.

Under the merger terms, BBVA will issue 196 million of its shares and will pay $4.6 billion in cash in the transaction. The shareholders will have the option to convert any BBVA American depositary shares received in the transaction into BBVA common shares for no additional consideration.

Headquartered in Birmingham, Ala., Compass is a financial holding company and BBVA is a financial group based in Bilbao, Spain.

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